Australia's AWB to Lose Export Monopoly in 2008

The Australian government will keep the country's wheat export monopoly but will hand the powers from the scandal-hit AWB to a new grower company by mid 2008, a government spokesman said on Tuesday.

The government will continue to hold AWB's veto over rival wheat sales until July 1, 2008, the spokesman said, in a move designed to give wheat growers added certainty over the sale and marketing of the 2007 winter crop.

"The industry has until 1 March 2008 to establish a new entity. If the industry doesn't have it together by the first of March, the government does reserve its right to have alternative arrangements," the spokesman said.

The changes follow an Australian judicial inquiry which found that AWB had breached United Nations sanctions against Iraq by paying $222 million in bribes to the former government of Saddam Hussein between 1999 and 2003 to secure sales.

The Australian government last December temporarily stripped AWB of the veto, assigning the power instead to Agriculture Minister Peter McGauran until June 30 this year, allowing for limited competition for Australian wheat exports.

The veto is seen as the heart of the export monopoly -- called the "single desk" -- because it confers the right to decide who can export.

The future of wheat marketing arrangements has divided the ruling Liberal-National Party coalition government, with some Liberal Party MPs urging an end to the export monopoly, while the rural-based Nationals argued strongly to retain the single desk.

The United States wheat industry, which competes fiercely with Australian wheat exports on world markets, for decades has been a powerful opponent of the monopoly on competition grounds.